Monthly Archives: April 2017

The folks in corporate India have strong views about their own perceptions of ‘ground realities’

Almost everyone in the Indian corporate world has a view on the ongoing tragedy in Kashmir. A view informed by the ruthlessness in punishing dissent, that is the norm in corporate politics. A war is being waged on social media, infected with the virus of videos extolling the virtues of uniformed Indian military men slapping and poking bleeding Kashmiri boys, forcing them to chant slogans against Pakistan, with greater threats leading to louder forced abusive slogans. “Ideal treatment for stone pelters,” said a friend in a WhatsApp group. A bunch of others chimed in, in agreement.

This column is not going to be about how those pelting stones are civilians in unrest, who could in fact turn to pelting grenades. Nor will this column purport to explain why atrocities on the Pundits inflicted in the 1990s cannot justify atrocities on kids in Kashmir today. For now, I am not even getting into the issue of some popular singer whose claim to fame is singing on television, abusing retired Indian military men who have actually served in war, for speaking up against military brutality on civilians.

Since the folks in corporate India have strong views about their own perceptions of “ground realities” in Kashmir (it matters not if social media warriors had even considered volunteering for basic National Cadet Corps service as students), this column will simply seek to translate what living in Kashmir can feel like if the legal framework applicable there were to be made applicable to an Indian corporate.

Let’s take the simplest and the most obvious cause of state high-handedness in areas like Kashmir (as indeed large parts of the North East) and see how it would feel to work in corporate India if the same cause were replicated. Essentially, let’s adapt the law applicable in Kashmir to the law governing running business in corporate India. This is necessary since most people with the strongest views on Article 370, which reflects the contract by which Kashmir joined the Indian Union, have never read the Armed Forces (Jammu & Kashmir) Special Power Act, 1990 (the dreaded “AFSPA”), which governs life on the street in Kashmir.

It is easy to read, however uneasy the reading can be for the reader. It has barely eight effective provisions. In a nutshell, any government officer can do anything with your life and property, and never be called to account. Forget having checks and balances in the form of tribunals such as the National Company Law Tribunal or the Securities Appellate Tribunal. Forget bringing errant public servants to book through anti-corruption measures in courts of law. Read on for what would govern life under AFSPA in the corporate or industrial world:

1. If the government is of the opinion that any industry poses danger that use of severe measures is necessary to prevent violations of law, the government may declare the whole or any part of such industry to be a “disturbed industry”.

2. Any government officer may, if he is of the opinion that it is necessary, fire upon or otherwise use force, even to the causing of death, against any person, who is acting in contravention of any law or order, do so in a disturbed industry.

3. Any government officer may, in a disturbed industry, destroy any place from which violation of law is likely to be made or attempted to be made.

4. Any government officer may arrest without warrant any person against whom a reasonable suspicion exists that he is about to commit an offence and may use such force as may be necessary to arrest.

5. Any government officer may enter and search, without warrant, any premises to effect such arrest or to recover any person believed to be wrongfully restrained or confined or any property reasonably suspected to be stolen property, and may for that purpose use such force as may be necessary, and seize any such property.

6. Any government officer may stop, search and seize any vehicle reasonably suspected to be carrying any person against whom a reasonable suspicion exists that he has committed or is about to commit an offence, and may, for that purpose, use such force as may be necessary to effect such stoppage, search or seizure.

7. Every person making a search under this Act shall have the power to break open the lock of any door, almirah, safe, box, cupboard, drawer, package or other thing, if the key is withheld.

8. Without approval of the government, no person who has used or claims to have used powers under this law can be prosecuted or sued.

Not too long ago, the Securities and Exchange Board of India Act was sought to be amended to permit search and seizures without the need for even a warrant. In fact, a Presidential Ordinance contained such provisions. A Parliamentary Standing Committee met various stakeholders and representatives of industry and rightly killed the provision although it was believed that “war like” powers were necessary to combat securities market abuse.

The Finance Act, 2017, has indeed brought in a provision protecting the tax department from having to explain how it had “reason to believe” or “reason to suspect” that led to a search and seizure operation. When such powers begin to get mildly used, fellow Indians living in the corporate bubble will get a faint whiff of what life can be like when you run a grocery store in the streets of Kashmir or the North East. Until then, there will be no let up in the enthusiasm to wage war on social media against civilians being punished for protesting against excesses encouraged by incentives embedded in the legal policy governing these regions.

This column was published Without Contempt in the editions of Business Standard published on April 20, 2017

It is by far the boldest move in executive governments pushing the envelope in breaking the law with the very process of law-making. The current government has piloted the Finance Act, 2017, through Parliament to get substantial legal provisions passed without the scrutiny of the Rajya Sabha.

Many appellate tribunals that hear appeals against orders by regulatory authorities have been wound up for being merged with other tribunals —essentially, changes in institutions that were set up in the first place, with the approval of both the Lok Sabha and the Rajya Sabha. Constitutional courts may be visited with challenges to the abuse. But not much may happen there. The Constitution has an inbuilt check and balance in the office of the Speaker of the Lok Sabha. She has the last word on whether or not a proposed law is a Money Bill, that is, a law that deals with matters of finance and tax, as set out in the Constitution.

The approach of the government is legally wrong. However, every wrong is not justiciable. If the Constitution set much store by the judgement of an occupant of high office, it was arguably intended that the occupant of that office must be trusted. If that trust is belied, it would only follow that we have a loophole in the Constitution that can only be corrected by a constitutional amendment.

It is equally true that courts have not always steered clear of every wrong that is not justiciable. Constitutional courts have happily legislated. Either entire legislation (for example, environmental charge for entry of vehicles into Delhi) including de facto contents of the Constitution (for example, the judges’ collegium for judicial appointments) have been created in the past by judge-made law. When facts are provocative enough, intervention may indeed follow.

In a challenge to the replacement of governors of states as political decisions, courts have ruled that no decision of the government, including a decision to replace a governor can be arbitrary, yet ruling that the decision cannot be interfered with. It is likely that the pending litigation over whether legislation that are nowhere near Money Bills can be passed by Parliament as if they were Money Bills, would meet the same fate.

This contrivance aimed at simply circumventing the Rajya Sabha has been resorted to in the past. The Foreign Exchange Management Act, 1999, had been passed by both Houses of Parliament as a non-criminal law to replace the dreaded criminal law contained in the Foreign Exchange Regulation Act, 1974. That was not a Money Bill. That had been a major milestone in India’s legislative and economic policy history. Two years ago, provisions criminalising exchange controls were brought into FEMA through a Money Bill. No consent of the Rajya Sabha was taken.

These infractions of law were not challenged since they were not politically correct for challenge. Now that a bigger gauntlet has been thrown, it is possible that some may challenge it. The history of constitutional challenges to the creation of tribunals has itself had a chequered history at the hands of courts. The National Tax Tribunal could not be set up due to such a challenge. The National Company Law Tribunal could indeed be set up although in its new form it is in conflict with earlier rulings of the Supreme Court rendered when dealing with earlier attempts to set up the Tribunal. There are as many views on interpreting the Constitution as there can be benches of the Supreme Court and of multiple high courts.

All of this is not to say that all the changes sought to be brought in are bad. There are some laudatory amendments — one is the retirement age of the presiding officer has been extended to 70 years. Some changes are horrible. The tribunals listed in the Finance Act, 2017, are not the only ones whose constitution has been disturbed. A provision entitling government to similarly merge other tribunals not named for now, by a simple executive fiat has also been passed as a part of the Money Bill.

The Finance Act, 2017, is a quiet power-grab in the conflict between arms of the state. If the judiciary wrested control back by striking down the National Judicial Appointments Commission, the executive has sought to strike back by giving itself powers over vast areas of quasi-judicial territory.

This is the most vulnerable part of the Finance Act, 2017, since it could be struck down as being arbitrary as it is a matter of “excessive delegation” of powers by the legislature to the executive. A constitutional challenge to such delegation is not about whether it is a Money Bill. Even if it were to be regarded as a provision in a Money Bill, it would be liable to be attacked as an arbitrary delegation of power to the government.

A version of this post was published as my Without Contempt column in the Business Standard in its editions dated April 6, 2017